Toronto area home sales rebounded by 12 per cent from September to October, pointing to a stronger fall market after a policy-driven pullback from a frenzied market that peaked earlier this year.
The Toronto Real Estate Board said Thursday that 7,118 homes were sold in October, up from the month before but down 27 per cent from the same month last year.
“Every year we generally see a jump in sales between September and October. However, this year that increase was more pronounced than usual compared to the previous ten years,” said board president Tim Syrianos.
“While the number of transactions was still down relative to last year’s record pace, it certainly does appear that sales momentum is picking up.”
The average selling price in October was $780,104, up less than one per cent from September but up 2.3 per cent compared with October 2016. Price growth was driven by appreciation in the townhouse and condo segments.
The average price of a townhouse in the GTA was up 7.4 per cent at $629,507, while the average condo price was $523,041 up 22 per cent year-over-year, the most of any housing type. Meanwhile, the average price of a detached home was down 2.5 per cent year-over-year at $1 million. Prices of semi-detached homes rose 6.3 per cent to $764.293.
Sales in the first 10 months of the year slipped to 80,198, down 19 per cent from the same period in 2016. Sales have dropped more than 10 per cent from the record set in March before Ontario announced its housing plan.
A spike in Toronto-area home prices earlier this year resulted in the provincial government’s imposition of a number of measures to cool the market after a shortage of detached home listings helped push up prices.
In addition, the Bank of Canada has raised interest rates twice in recent months to the current overnight rate of one per cent, signalling a clampdown on cheap borrowing and driving the big bank prime rates and the cost of variable-rate mortgages higher. The cost of new fixed-rate mortgages have also risen as yields on the bond market have also risen.
Meanwhile, the Office of the Superintendent of Financial Institutions will implement new lending guidelines at the beginning of next year. Among the changes being considered is a requirement that homebuyers who do not require mortgage insurance still have to show they can make their payments if interest rates rise.
The policy-driven changes in the Toronto market, which include a tax on foreign buyers, have followed the trajectory of the Vancouver market, with a pullback directly after new rules were introduced followed by a pick up after a relatively short time, said TREB’s director of market analysis Jason Mercer.
“It appears that the psychological impact of the Fair Housing Plan, including the tax on foreign buyers, is starting to unwind.”
Vancouver home sales data from October is expected later Thursday.
The CHMC warned last month that the country’s hottest housing markets remain “highly vulnerable” with evidence of moderate overvaluation and price acceleration in Toronto, Hamilton, Vancouver, Victoria and Saskatoon.